The fact that the eligibility criterion to invest in Indian stock markets is very easy to meet motivates more millennials and gen Z to pursue such investment options at an earlier stage of their lives.
One can invest in the share market despite of being young with minimal investment abilities or otherwise.
Capital appreciation and the willingness to take risks open doors for young investors to invest in the Indian share market. Retail participation has been increasing exponentially in the last few years as a greater number of younger people try to understand the dynamics of the Indian stock market and learn to trade online.
As a young investor, you must take care and follow a series of steps based on which you can fulfill your goals. Some of these include defining your financial goals, learning about how to analyze the stocks through fundamental analysis & even technical analysis if you are willing to become a professional trader.
Tips for youngsters to invest in stock markets
- Open a Demat and trading account
The first step to investing in the stock market is to open Demat and Trading account through a stockbroker. Once you have your Demat and Trading account ready, you can start trading.
- Research before investing
Before making any investment in the stock market, conduct thorough research and do a complete study of the management, sales, products/services, future prospects, clientele and other aspects of the company. After your complete research, choose the best stocks which are worth investing in. Remember, you must only invest in the business you understand.
- Follow a disciplined approach
Investors must invest their money systematically and in the right shares to generate premium returns. A prudent investor must always follow a disciplined approach and have the patience to generate long-term returns.
- Use the stop loss technique on every trade
As a trader, it is of utmost importance to follow the stop loss technique. For e.g.- if you purchase a stock at Rs. 100 per share, you can decide your stop loss figure at Rs. 92 per share. Thus, if the stock price falls, your shares will be automatically squared off.
- Understand the type of orders
Some of the common types of orders include stop loss, normal, bracket order, Margin Intraday Square up, Limit Order, Cover Order, etc. As a trader, you must understand how each type of order works and how you must operate in the stock markets based on these orders.
- Create a diversified and broad portfolio
It is highly essential to diversify your portfolio across different asset classes and instruments to generate optimum returns on investments with minimum risk. A diversified portfolio provides stability even during tough times and helps you to gain from bullish runs. With portfolio diversification, you can gain from the rally as you are not only focusing on one asset class.
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Happy and Smart Investing!